Buy Strides Arcolab - Motilal Oswal

Strides Arcolab (STR IN; Mkt Cap USD0.5b, CMP Rs405, Buy)

Strides has announced acquisition of 70% stake in Inbiopro Solutions, a biotechnology company based out of Banglore which was set up in 2007 by a team of 3 biotech professionals. The acquisition entails an investment of Rs650m over next 3 years to develop and commercialize the products.Strides is getting immediate access to a pipeline of 8 biosimilar products with current global market size of US$28b.

This acquisition enables Strides to enter into biologics space and enhances Strides' specialty portfolio, especially in oncology segment. The acquisition also provides access to both, high expression mammalian and microbial platform-based development capabilities.

At CMP of Rs420, the stock trades at 9.9x CY11E and 8.7x CY12E earnings. Given the expected growth in earnings and improving business fundamentals, we believe the stock will offer impressive returns. Buy with target price of Rs557 (12x CY12 EPS).

Source : Equity Bulls

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